Are you wondering how to become a CFO?
Well, you’re not alone.
Being a Chief Financial Officer (CFO) is one of the most sought-after positions in the corporate world!
Of course, becoming a CFO is no easy feat. A CFO is responsible for the current and future financial health of a whole company. And, becoming a CFO requires years of experience, relentless ambition, business acumen, and probably a CPA license.
But is that still true?
A recent Korn Ferry survey found that CFOs with a CPA decreased from 46% to 36% from 2014 to 2019 at the 1,000 largest US public companies. Plus, "CFOs are increasingly MBAs with investment banking or consulting experience."
[Image Credit & Reference: Korn Ferry through WSJ]
While having a CFO job with a CPA license feels like an obvious combination, it is less and less the case in the US.
With this trend expected to continue, I asked myself what does it take to become a modern CFO?
After graduating from Georgia State University with a BBA in Accounting, I put all my efforts into two things:
At the time, I believed that obtaining my CPA was the best way to be successful in accounting. Getting a CPA felt like a necessary step to becoming CFO.
Fast forward 10 years later, my CPA license did open several doors for me career-wise. But, it did not prepare me to be “CFO material" as I thought it would.
Why?
Because I realized during that time that being a great accountant was not enough to be a great CFO.
In writing this article, I hope to shorten the learning curve for aspiring finance leaders by covering:
1️⃣ Why is the CPA license becoming irrelevant for CFO roles?
2️⃣ How can you increase your chances of becoming a CFO with or without a CPA license?
First, let’s take a closer look at why companies hire less CPAs to fill their CFO roles.
Shifting Expectations from the Top
Traditionally, CEOs relied on their CFOs to ensure the company was compliant with accounting and tax regulations.
But not anymore.
Now, CEOs and boards of directors want CFOs to be their go-to person for lot more things.
CEOs want to rely on CFOs to provide financial insights into a broader range of strategic initiatives. So, CFOs often need to provide financial and strategic insights in a variety of fields, including:
[Image Credit & Reference: Korn Ferry]
With the expansion in CFO responsibilities, CFOs manage more than a company’s balance sheet.So, if CFOs are expanding upon their responsibilities, who is in charge of the company’s accounting tasks?
Controllers and Chief Accounting Officers (CAOs)
Though CFOs are still responsible for the financial statements, much of the day-to-day accounting tasks have been handed to them. CFOs that have a Controller or a CAO don’t need the specialized education of a CPA license. By hiring specialized help, they no longer need a CPA license to do their CFO job.
This shift in corporate management is making aspiring CFOs focus more on obtaining other skill sets that are more valuable to the modern corporate boardroom. In short, the CPA license does not give the same advantage to aspiring financial leaders as it once did.
[Caveat: Companies' size and industry matters. SMEs that can't afford 2 strong Finance and Accounting still favor having a CPA CFO. Likewise for companies in regulated industries.]
What Investors Want
Wall street analytics, board members, and private equity firms expect CFOs to be able to represent the company and speak on the majority of strategic initiatives.
As investors’ focus shifts away from compliance standards and toward growth and other business fundamentals, CFOs must come out of their “shells” and be great communicators and data storytellers.
This trend is encouraging aspiring financial leaders to hone a different set of skills compared to previous generations.
Another trend worth noting is that more companies are looking toward banking and investment consultants to fill the CFO spot.
As investor relations become more pivotal to a company’s success, the CFOs who can successfully manage these relationships, are in demand. CFOs with background in banking and investment also offer an advantage for firms dealing in mergers and acquisitions.
If you’re looking to become a CFO, you should focus on what investors are looking for in CFOs they invest in. If markets are putting a value on strategic thinking and innovation, those are the skills you should acquire if you want to become a CFO.
The Constant Battle Between CPA and MBA
While the number of CPA-licensed CFOs is on the decline, the number of MBA-accredited CFOs remains strong, according to a Kolder Associates report.
[Image Credit & Reference: Crist Kolder Associates]
The biggest reason for this trend is that MBA education aligns more with the full suite of CFO responsibilities.
At the core, a Master’s in Business Administration (MBA), should equip business leaders to tackle a whole range of business challenges. Indeed, most MBA curriculums teach core business skills like accounting, finance, organizational management, marketing, IT, and leadership.
However, CPA curriculums require students to pass a 4-part exam that covers all major accounting subjects that may be relevant during one’s career. This can include internal controls, tax, audit, fraud, nonprofit reporting, and government accounting.
Although CPAs and MBAs are not required to obtain the CFO position, both offer strong competitive advantages for CFO candidates.
It is no doubt that CPAs learn numerous valuable skills needed to run a functioning business.However, a CPA license alone doesn’t teach all the skills required of the modern CFO. That is why less CEOs and boardrooms are prioritizing the CPA license as a requirement for their CFO roles.
[Image Credit & Reference: Crist Kolder Associates]
The Rising Competition from CMAs and CGMAs
As far as Accounting certifications are concerned, the CPA isn’t the only option for would-be CFOs.
Certified Management Accountants (CMAs) and Certified Global Management Accountants (CGMAs) are getting more recognition because:
Indeed, about 50% of the CMA exam covers finance concepts, including Planning, Budgeting & Forecasting. Finance professionals in the Americas are required to take the CGMA Finance Leadership Program and case study exams to earn the designation.
New Pathways to the CFO Role
With the expansion of the CFO responsibilities, there are increasingly more pathways to becoming a CFO. While having a CPA license is a competitive edge, it is no longer a requirement for the position, especially in large companies.
Becoming “CFO material” today is all about having a well-rounded background paired with business acumen and expertise in strategic business partnering.
If you want to become a CFO, here are 10 things you should consider:
1 - Getting the Right Education
Most CFOs have a bachelor’s in business administration, economics, accounting, or finance. Further, many CFOs obtain their MBA, some with specialties in accounting or finance. Executive MBAs are becoming increasingly popular as they focus on the specific skill sets needed to manage large organizations.
Graduate certificates and licenses are other common education accreditations earned by CFOs. Note that different specialties will help candidates advance in specific industries.
2- Invest in the Right Certification
For those who don’t have a background in accountancy, there are a few additional options:
While certifications aren’t a must, they will help you stand out amongst the competition.
Check out the Top 10 Accounting Certifications and Top 10 Finance Certifications for more guidance on that.
3 - Strive for the Right Experience
Big 4 Public Accounting, Investment Banking, Consulting, Treasury are common paths to the CFO office, but not the only ones.
The goal is to have a well-rounded experience to effectively lead all the accounting and finance functions of an organization, as well as other corporate-wide strategic initiatives.
Regardless of which role you take one, focus on responsibilities first, rather than titles.
Plus, keep in mind that you will be able to learn more at smaller and mid-sized companies (as you will often wear multiple hats), unless you are intentional about changing/rotating roles every 2-3 years within a larger company.
Set yourself apart by:
✅ Looking for opportunities to be the person in charge to set up and run a budget/forecast process
✅ Working closely with other departments, i.e. supply chain, marketing, operations to understand how you can add value to them from a finance and accounting standpoint.
Focus on responsibilities first, rather than titles.
4 - Develop a Strategic Mindset
Being a CFO means you are a company-wide leader. This involves big-picture thinking, vision setting, and smart-objective setting for all areas of your business.
It also means being comfortable navigating through change and embracing technology in this current environment.
That's why having a strong business acumen comes handy.
CFOs should be able to solve significant, complex problems across multiple teams and business functions.
5 - Master Business Partnering (i.e. FP&A)
CFOs are masters of not only internal partnerships, but also external partnerships.
They must adequately represent their companies to the public, the suppliers, and all business partners.Learning to create meaningful partnerships across business functions is very important.
Developing the following soft skills will help you for that:
✅ Negotiation
✅ Problem Solving
✅ Data Storytelling
✅ Human skills (i.e. Listening and Empathy)
✅ Communication (i.e. Verbal and Written)
6 - Sharpen Leadership Skills
CFOs are leaders and, thus, should be able to lead effectively. This implies knowing when to switch leadership styles based on the situation.
Being able to inspire and motivate a diverse workforce is crucial to successfully initiate and lead change in organizations.
The reality is "Leadership, like swimming, cannot be learned by reading about it." — Henry Mintzberg.
So, you should capitalize on any opportunity to lead inside and outside of work through volunteering.
"Leadership, like swimming, cannot be learned by reading about it." - Henry Mintzberg
7 - Embrace Lifelong Learning
Education isn’t a one-time activity; it is a life’s pursuit. CFOs should regularly learn new skills and strategies while keeping current on global news. Global events are constantly shifting economic conditions, so CFOs should be ready to succeed regardless of the economic climate.
As I like to say Lifelong learning is a must because school won’t prepare you for a lot of things you will face in your career.
And that does not have to be expensive. Check out these 10 lifelong learning platforms to see it for yourself.
For existing CPAs, this is a great opportunity to grow those skills that are in-demand for the modern CFO role. With a strong accounting background you have an edge for any finance role you apply for.
8 - Work on Your Personal Brand
Good or bad, a CFO's personal brand can impact the company as a whole. Therefore, CFOs should consider how the outside world perceives them as well as how their internal “customers” think about them.
Substance and form are equally important in this case.
Delivering quality work is great, but not enough. You have to know how to showcase it and articulate your value whenever you get a chance.
9 - Find a Mentor AND a Organization Sponsor
Even the most successful business leaders had mentors or coaches to help them along the way. It’s essential to have a loyal person offer objective advice to help you grow and achieve your goals as a mentor.
It is also essential to get help from an insider.
An organization sponsor is typically an executive team member that supports you in your career at the company you work for. They can help you get on different work projects that will increase your visibility and leadership skills right where you are.
10 - Resilience
Being a CFO is no joke. It involves a lot of stress and pressure because you will have to make complex and impactful decisions daily.
You will also need mental toughness to initiate change and lead entire teams through successful completion despite any roadblocks.
Start developing healthy stress coping mechanisms as early as possible.
Bonus Tip
To create your own roadmap to the CFO office, do Career Gap Analysis.
This is the quickest and easiest way to get clarity on how you should spend your time and energy for the next few years, especially if you do not have a mentor.
The Bottom Line
Most aspiring Finance and Accounting leaders want to become CFOs. If that's your goal, do not shy away from it.
Fortunately, there are more and more career paths and options available to reach that goal as many modern CFOs come from a wider range of business backgrounds.
So, the notion that you must have a CPA license to become one is slowly fading away.
You can increase your chances of becoming a CFO with or without a CPA license by having the well-rounded experience and skills that most companies now look for in that role.
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Hi, I'm Wassia.
It's my pleasure to see you here.
I'm an Accounting and Finance executive, with 15+ years of experience in Corporate Accounting and FP&A.
I regularly post down-to-earth career advice for aspiring Finance and Accounting leaders on LinkedIn.
If you found this article helpful, please share it with your network and follow me for more tips on how to take your career to new heights.
Thank you!
